EXCERPTS FROM GLOBE’S REPLY TO NTC POINTS TO CIRCULAR’S WEAKNESSES
[Editor’s note: The following excerpts from Globe Telecom Inc’s reply to the National Telecommunications Commission’s complaint against Globe (Admin. Case No. 2011-098) presents the telco’s reasons for the dismissal of the case against it.
The other telcos’ answers were similarly constructed.]
GLOBE TELECOM, INC. (“Globe”), by special appearance only of counsel, in response to the Honorable Commission’s Show Cause Order dated 12 December 2011 and an Answer in the above-captioned administrative case, respectfully moves for the immediate dismissal, without further hearing, of said case based on the GROUNDS discussed herein below:
A. The Affidavit/ Complaint does not state a cause of action. Thus, it must be dismissed under Section 1 [ Grounds to Dismiss], Rule 16 of the Rules of Court)
Section 1(g), Rule 16 of the Rules of Court clearly provides that a case may be dismissed when “the pleading ascertaining the claim states no cause of action.” A reading of the Affidavit/ Complaint of Froilan B. Jamias dated 12 December 2011, which was used as the sole basis for the filing of this Administrative Case No. 2011-098 and the issuance of the Show Cause Order of the same date, clearly shows on its face that it does not state a valid cause of action against Globe for the following reasons:
FIRST. Article 1157 of the Civil Code specifies exclusively the sources or bases which give rise to any legal obligation binding and enforceable in law. Article 1157 clearly provides that: “Art. 1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts;
(4) Acts or omissions punished by law; and (5) Quasi-delicts” The subject Affidavit/ Complaint of Froilan B. Jamias, particularly in paragraph 3 thereof, alleges that for the period 05 December 2011 to 09 December 2011, Globe Telecom collected from its subscribers Php 1.00 per SMS despite and in violation allegedly of NTC Memorandum Circular No. 02-10-2011 which, allegedly, lowered the SMS rate from Php 1.00 to Php 0.80 per text.
But there is absolutely nothing in the questioned circular which requires public telecommunications entities to reduce their SMS retail fee or text message servicing fee from Php1.00 to Php 0.80 per text. All that the circular requires is for said PTES to reduce their interconnection charge from Php 0.35 to Php 0.15 per text, without more. Indeed, a plain albeit repeated reading of said circular does not convey expressly or impliedly in any way that the regular retail charge of Php 1.00 shall also be reduced by Php 0.20 per text. Verily, the circular is notably silent on this point. Read again.
Given therefore that the enumerated listings of obligation-causing instances in Article 1157, whether separately or collectively, do not obtain in the present Affidavit/ Complaint against Globe Telecom, this case thus must be dismissed. In fact, Globe respectfully requests this Commission to point out to Globe any specific section or provision of this Circular which provides that, upon effectivity of the same circular, the regular retail cost of text will be a maximum of Php 0.80 per text only. There is none.
To be sure, the Show Cause Order charges that the retail cost per text should have been reduced as a supposed “necessary consequence.” But this is pure extrapolation (apart from being non sequitur, as a subsequent discussion herein will show). The Honorable Commission will note that its very own questioned circular provides, in Section 5 thereof, that “[v]iolation of herein prescribed guidelines shall be imposed penalties pursuant to existing laws, rules and regulations.” Surely, the Commission knows that any law or administrative rule which imposes an obligation and, worse, metes any penal sanction must be clear and unambiguous, pursuant to the two-fold principle that penal laws (and circulars which have the force of law) are strictly construed against the State and that there is no offense where there is no law that makes it so – “Nullum crimen, nulla poena sine
lege.” Otherwise, if a person is so penalized despite an unclear and silent law or rule like Memorandum Circular No. 02-10-2011 on the alleged text rate lowering, this Commission will be guilty of gross violation of constitutional due process. From the viewpoint of the constitutional law, particularly Section 1, Article III of the Constitution (“No person shall be deprived of life, liberty and property without due process of law.”), any law or rule which is unclear is void for vagueness and unconstitutional consistent with the concept of both constitutional substantive and procedural due process. This is because every person has that right to be informed of or to “know” any penal law or rule, particularly the specific act being punished, prior to his alleged violation thereof. And to “know” the law or rule presupposes that the law or rule is “clear” in the very first place. It is therefore obvious that NTC Memorandum Circular No. 02-10-2011, insofar as the same is now made as basis of the Affidavit/complaint of Froilan B. Jamias and this Administrative Case, is unconstitutional, thus, without force and effect partially as qualified.
xxx xxx
SECOND. NTC Memorandum Circular No. 13-06-2000 (Subject: Billing of Telecommunication Services), at Section D (1) thereof provides that “the rates for xxx cellular mobile telecommunication services ( CMTS) are hereby deregulated.” Because SMS rates are deregulated or exempted from rate-fixing by the NTC, the NTC does not have the power and jurisdiction to fix the regular retail rate of SMS from the prevailing Php 1.00 per text to only Php 0.80 per text and, worse, by way of a quasi- legislation exemplified by NTC Memorandum Circular No. 02-10-2011, even assuming arguendo that the alleged circular is clear insofar as the lowering of the regular retail price of text to Php 0.80 per text is concerned.
Section D (2) of Memorandum Circular No. 13- 06- 2000 also provides that “the maximum rates shall be the prevailing approved rates as of the date of the effectivity of this circular” dated June 16, 2000.
The approved rate for regular and retail text then prevailing was Php 1.00 per text (not Php 0.80 per text), exclusive of the Php 0.35 access charge and the 12% or Php 0.12 (per Php 1.00) Value Added Tax (VAT). Therefore, this earlier circular prevails as against the unclear and ambiguous quasi-legislative Memorandum Circular No. 02-10-2011 which is illegal insofar as the NTC construes and applies it now as one of rate-fixing. To date, the earlier memorandum circular remains unamended and unrepealed.
xxx xxx
THIRD. Corollary to the second argument above, the effective ( blended/ average) cost of rate per text today is only about Php 0.12. The ability of the telcos to offer Php 0.12 per text rate springs from the fact that the regular retail rate of text is Php 1.00 per SMS. This is what is known as the “dynamics of rates- fixing,” a case of balancing the mix to get the profitable average costs of text, which involves the purely personal business studies, decision and discretion of the able and intelligent marketing and sales people of the competing telcos, business information/ data and manpower talents beyond the competence of, and lacking in, regulator NTC. As a purely business decision/ discretion involving a lot of prior studies conducted thereon by the CMTS industry (that is, Php 0.12 effective rate per text and the regular retail price of Php 1.00), the National Telecommunications Commission has no right to intrude/ intervene therein. Verily, in this connection and in support hereof Sections 4 ( d) and ( f) of Republic Act 7925 provide: “xxx xxx d) Rates and traffic charges shall be fair, just and reasonable and for this purpose, the regulatory body shall develop tariff structures based on socioeconomic factors and on financial, technical and commercial criteria as measures to ensure a fair rate of return and as a tool to ensure economic and social development; xxx xxx f) A healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end in view of encouraging their financial viability while maintaining affordable rates;”
This argument is further amply supported by the Supreme Court’s ruling in Philippine Communications Satellite Corporation vs. Alcuaz, et al., 180 SCRA 218, pertinent portions of which read as follows:
“The rule is that the power of the State to regulate the conduct and business of public utilities is limited by the consideration that it is not the owner of the property of the utility, or clothed with the general power of management incident to ownership, since the private right of ownership to such property remains and is not to be destroyed by the regulatory power. The power to regulate is not the power to destroy useful and harmless enterprises, but is the power to protect, foster, promote, preserve, and control with due regard for the interests, first and foremost, of the public, then of the utility and of its patrons. Any regulation, therefore, which operates as an effective confiscation of private property or constitutes an arbitrary or unreasonable infringement of property rights is void, because it is repugnant to the constitutional guaranties of due process and equal protection of the laws. xxx xxx “What is a just and reasonable rate is not a question of formula but of sound business judgment based upon the evidence; it is a question of fact calling for the exercise of discretion, good sense, and a fair, enlightened and independent judgment. In determining whether a rate is confiscatory, it is essential also to consider the given situation, requirements and opportunities of the utility. A method often employed in determining reasonableness is the fair return upon the value of the property to the public utility. Competition is also a very important factor in determining the reasonableness of rates since a carrier is allowed to make such rates as are necessary to meet competition.”
xxx xxx
In the case at bar, the SMS providers never proposed the Php 0.80 per regular/retail text and, in fact, Memorandum Circular No. 02-10-2011 is completely silent on this Php 0.80 per text. Therefore, because of the NTC’S lack of jurisdiction in law and because of Supreme Court jurisprudence upholding rate-fixing as quasi-judicial, the instant administrative case must be dismissed immediately and without further hearing on clear jurisdictional ground following Section 1 (a), Rule 16 of the Rules of Court which is of suppletory effect.
C. Historically and arithmetically, the present case is flawed and without basis.
Let us retrace history. Sometime in 1993- 94, the regular retail rate per intra- network text was quasi- judicially fixed by the NTC at Php 1.00. Please relate this to Section D ( 2) of Memorandum Circular No. 13-06-2000 (Subject: Billing of Telecommunication Services). Thereafter, the NTC ordered the interconnection of the services of CMTS providers. Thus the receiving carrier of an inter- network text demanded Php 0.35 per text as access or interconnection charge from the transmitting carrier. Arithmetic will show that because the Php 1.00 per text applies only to intra- network text, then this access charge of Php 0.35 is an additional expense as to render the rate of inter-network text (regular retail) to Php 1.35 (Php 1.00 + Php 0.35 access charge) per text. The CMTS service providers, however, instead of passing on to the consumers the additional Php 0.35 access charge ( an added cost of production), which they have every legal right to pass on, absorbed this Php 0.35 access charge by not increasing the Php 1.00 per intra- network text. Subsequently, in 1996, the government passed the EVAT law which imposes an additional 12% (or Php 0.12 on Php 1.00) on the cost per intra- network or inter- network text. This 12% VAT is passable to the consumers by force of law. But the text providers again voluntarily absorbed this 12% VAT into the Php 1.00 per text rate. Thus, the real cost then of intranetwork text is Php 1.12 per text (Php 1.00 + Php 0.12 VAT); with the cost of inter- network text increasing to Php 1.51 per text ([ Php 1.00 + Php 0.35 access charge] + 12% VAT). Even if one were to subtract from this Php 1.51 cost per inter- network text, the amount of Php 0.20 access charge ( Php 0.35 per access charge per text minus Php 0.20), the resulting cost of inter- network text would still be Php 1.31. Why must the text providers therefore be punished for their acts of grace? Strictly and rightly so then, the government and the public have a choice, to wit: either the public pays ( 1) the higher Php 1.12 per intra- network text (regular retail) and Php 1.51 (or Php 1.31) inter-network text (regular retail) or ( 2) simply pay a straight ( lower) Php 1.00 per text ( regular retail) regardless of whether the text is intra- network or inter- network.
Again, on the basis of the immediately preceding argument, it is obvious that Mr. Froilan B. Jamias and the NTC have no cause of action against herein Globe Telecom, Inc..
LATE-BREAKING NEWS
As this pleading is being concluded, it has developed that Globe has just filed with the Honorable Commission – and voluntarily, it must be emphasized – another one of its innovative offerings called “Super all Txt80” whereby, for a rate of Php 0.80, a subscriber will enjoy 100 texts to all networks. A copy of said filing is attached hereto for the Commission’s reference as Annex “A.” This offering, which effectively translates to a rate of Php 0.80 per SMS, is in effect a substantial compliance with the supposed, albeit unwritten and non-existent, intent of the questioned circular to lower the regular retail text rate from Php 1.00 to Php 0.80 (although it must be stressed that the matter of reducing text charges and rate- fixing is not something that can be compelled by quasi-legislation). Perforce, on this latebreaking ground, the Show Cause Order ought to be of no force and effect for being moot and academic.
PRAYER
WHEREFORE, it is respectfully prayed that the Affidavit/ Complaint of Mr. Froilan B. Jamias and the instant administrative case be dismissed outright for utter lack of basis and merit.
Necessarily the Show Cause Order must likewise be dismissed.
Mandaluyong City for Quezon City, January 12, 2012.